BEIJING—The growth of assets managed by China's trust companies moderated in the first quarter of the year as the economy lost momentum and regulators stepped up supervision over the rapidly expanding "shadow-banking" sector.

Trust firms have played a big role in funding riskier areas of the economy, taking money from investors and lending it at higher rates than those of the nation's banks, becoming a key segment of shadow banking, which operates alongside the traditional banking system.

Regulators, however, have been wary of the mounting risks from these riskier loans and have warned of the potential for bad debts. They have also rolled out a number of rules governing the sector following several high-profiled defaults on trust loans this year.

Officials told reporters Wednesday that they are exploring the possibility of the creation of a stability fund that could rescue trusts that get into trouble.

Trust companies in China had a total of 11.73 trillion yuan ($1.89 trillion) of assets under management at the end of March, up 7.52% from the end of last year, according to data released Wednesday by the China Trustee Association, a government-backed industry group. That was down from a 7.7% rise during the previous quarter and well below the double-digit gains of the recent past.

The average annualized return of trust products stood at 6.44% in the first quarter, well below the 7.4% average return recorded for all of 2013, the association said.

"It is getting difficult to realize such returns with the increased downward pressure on economic growth and the poor performance of the stock market," Wang Lijuan, a vice president of the association, said at a briefing.

China's economic growth slowed to 7.4% year-over-year in the first quarter, down from 7.7% in the final quarter of last year amid weak domestic and overseas demand.

The weaker economic growth has hurt corporate profits and raised questions over the ability of many companies to repay borrowings.

The China Banking Regulatory Commission issued new rules tightening oversight of the trust sector this month, the China Trustee Association said.

The rules bar trust companies from using "nonstandard funding pools," which lump investments together and enable trusts to make cash payouts on maturing products with proceeds from the sales of new investment products.

The rules also call on shareholders of trust firms to shore up capital or scale back their business if the firms suffer losses and have fund shortages.

The regulator is also studying a possible stability fund for the trust industry, the trustee association's Ms. Wang said, without giving details.

Financial regulators are already looking at setting up a deposit-insurance program for the banking sector to protect depositors in the event of a bank failure.

—Grace Zhu